Japan Major 4 Steels Report Profitable April-June Results

Japanese major 4 steel makers regained profitability at consolidated recurring profit for April-June due to recovering steel demand at home and abroad while they posted recurring loss for April-June 2009. However, higher raw materials cost was more than steel selling price increase. Nippon Steel reported the margin decreased by 3,000 yen per tonne. JFE Holdings and Sumitomo Metal Industries posted lower recurring profit than January-March period.

The major 4 makers would have harder time in July-September due to higher raw materials cost and lower gain from lower priced raw materials inventory along with slower export market. The major 4 makers expect profitable first half of fiscal 2010 started April compared with loss in same period of fiscal 2009.

The full year recurring profit outlook is 250 billion yen of recurring profit for Nippon Steel, 220 billion yen for JFE Holdings, 80 billion yen for Sumitomo Metals and 75 billion yen for Kobe Steel. However, the uncertainty remains for raw materials cost, steel selling price and Chinese oversupply for the second half of fiscal 2010.

Sumitomo Metals announced on Thursday the firm will post 25 billion yen of consolidated recurring profit for first half of fiscal 2010 compared with 47.6 billion yen of loss in same period of fiscal 2009. The firm posted 9.4 billion yen of recurring profit for April-June compared with 41.6 billion yen loss in same period of 2009. However, the quarterly profit was less than 22 billion yen in January-March due to lower margin.

Sumitomo Metals expects around 16 billion yen of recurring profit for July-September. The firm expects 500,000 tonnes higher raw steel output in second half of fiscal 2010 from the first half due to higher demand for large diameter pipe and higher plate mill production.

Kobe Steel announced on Thursday the firm posted 38 billion yen of consolidated recurring profit for April-June compared with 22.9 billion yen of loss in same period of 2009 and 34.2 billion yen of profit in January-March. The firm expects 40 billion yen of profit in the first half and 75 billion yen of profit for fiscal 2010 under certain condition due to uncertain future raw materials cost and steel selling price.

Kobe Steel’s steel unit posted 13.8 billion yen of recurring profit in April-June compared with 21.5 billion yen of profit in January-March and 26.9 billion yen of loss in same period of 2009. The unit expects 2.8 billion yen of loss due to inventory valuation effect while the steel sales volume is same level as April-June and higher raw materials cost is canceled by higher steel selling price. The unit expects 11 billion yen of profit for the first half and 26 billion yen of profit for fiscal 2010 compared with 54.3 billion yen loss and 24.6 billion yen loss for half and full year of fiscal 2009.